Ford’s dividend payout faces significant pressure from newly imposed U.S. import tariffs, making a reduction increasingly probable. The company’s 6% dividend yield is supported by a quarterly payout of 15 cents per share, which has remained steady since mid-2022.
Ford’s profitability outlook for 2025 is weaker, and investors face growing uncertainty about the stability of future returns.
The company’s profitability outlook raises concerns, as it anticipates a decline in free cash flow—a factor that sustains dividend payouts. Last year, Ford distributed $3.1 billion in dividends, backed by a net income of $5.9 billion, an unsustainable balance.
Projections for 2025 indicate free cash flow will fall between $3.5 billion and $4.5 billion, a considerable drop from the $6.7 billion recorded the previous year. The downturn is primarily driven by the tariffs on imported goods.
Ford is tackling its financial challenges by scaling back investments in its electric vehicle (EV) segment. With EV demand falling short of expectations, the decision may release funds to support dividend payouts. Reducing emphasis on EV development carries risks as internal combustion vehicle sales decline.
According to CBT, Ford’s dividend yield surpasses General Motors’ 1% and nears Stellantis’ 6%, despite Stellantis recently halving its payout. Stellantis has faced criticism for exceeding its free cash flow in dividend distributions, a strategy Ford might adopt to stay competitive.
Amid challenges, Ford’s stock has remained resilient, rising 1% this year and outperforming the broader S&P 500. Analysts anticipate that Ford’s regular dividend could decrease to 12 cents per share in the next quarter due to dwindling cash flow and the growing burden of tariffs.
Ford is prioritizing shareholder returns by investing $426 million in stock buybacks over the past year. Despite the initiatives, the combined cost of dividends and buybacks may soon exceed the company’s free cash flow. The dividend payout remains vulnerable, and its potential reduction will largely hinge on the extent of the tariff’s effects.
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